ChinAI #90: Alibaba and China's Digital Economy
Plus, more musings on Bill Bishop/Sinocism
Greetings from a land where the inhabitants preach the gospel of innovating the new normal and all the wonderful e-based opportunities that will save us all, yet somehow one in eight households only have a cellular data plan with no other type of internet service in the home…
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Feature Translation: Alibaba Research Deck on "Smart+" and the high-quality development of China's economy
The first wave of scholarship tried to understand the impact of AI from the starting point of innovation, often from the perspective of labs doing new research at the technological frontier or via the most visible consumer applications. The next wave of scholarship about the impact of AI will instead endeavor to understand the impact of AI through the lens of diffusion, unpacking the process by which how AI innovations spread from the cutting-edge labs to various different sectors, how AI intersects with the overall process of digitization. If you want to catch this next wave, then this 120+ page slide deck, co-authored by Alibaba Research Institute, Ant Financial Research Institute, and Alibaba Cloud Research Center back in March 2019, makes for very interesting reading.
Similar to previous translations of long slide decks, if there’s a comment on the slide (marked by a 1 on the slide layout), then that’s a marker I thought the slide was especially informative and translated it. In what follows, I’ll give a summary of some points from these slides; those interested in full translation can go to the specific slides for more info.
Slide 12: The key question the deck is trying to answer — How to transfer China's leading digital capabilities on the consumer side to the supply side? — is also the one Chinese industrial strategists are grappling with. While China’s consumer-side digitization leads the world, it’s level of supply-side digitization is relatively low (e.g. the proportion of digital factories is much lower than in Europe and America [46% in Europe, 54% in the US, and 25% in China]). Media and some scholarly coverage severely overweight the most visible aspects of China's digital transformation (look at how many people pay with their phones!). I can’t even count how many times I’ve been in briefings where someone talks about their revolutionary insight about how China’s tech ecosystem is better because they scale all the innovations that are first seeded in the U.S., while ignoring the deeper supply-side deficiencies in digitalization. We've emphasized this distinction in previous ChinAI issues on lack of technician talent for smart manufacturing as well as on the challenges of applying computer vision to quality inspection in manufacturing lines.
Slide 16: graphic of how Alibaba researchers see the different maturity levels of various smart technologies
Slide 23: table comparison of “digital twin” possibilities in different sectors (manufacturing, construction, medicine, and cities). In the examples section, the French company Dassault pops up a lot — have never heard of them but they seem to be at the heart of some France-China cooperation on digital transformation.
Slide 31: comparison between Zara and Hstyle (a Chinese online fashion company) that demonstrates the latter’s faster product iteration
Slide 34: I’m a sucker for graphs like these — good differentiation of different types of industries (e.g. large aircraft vs. cars vs. clothing vs. high-speed rail equipment) and prospects for smart manufacturing based on two axes: 1) the customization needs; 2) the number of components
Slides 42-43; 45-46: More stats about how China’s upstream industrial Internet digitization still trails the US (5% penetration of smart sensors vs. 12%; much lower cloud adoption rate; fewer patents on smart analytics; lower penetration rates of industrial robots; fewer companies planning to build digital factories according to surveys). Slide 46 has a cool comparison of the diffusion (there’s that word again!) of major industrial software (ERP, SCM, CRM, PDM)
Slides 50, 71: The unanswered core question: can you take the high-tech capabilities of the consumer-side digitization (from Baidu, Alibaba, Tencent, etc.) and transfer them in some way to the laggard sectors? Since it’s an Alibaba deck, the examples are from Alibaba’s ecosystem: the Tmall innovation center (slide 50) and Taobao Villages (71) — which are rural e-commerce hubs that encourage farmers to set up online sales (3202 of them across China, with 220b (RMB) in annual sales as of 2018
FULL(ish) TRANSLATION: Alibaba Slide Deck on China’s Digital Economy
More Musings on Bill Bishop and Sinocism
As another installment of our series of posts on gatekeeping the “China-gatekeepers” I want to dig into this recent interview Bill Bishop did with Jordan Schneider’s ChinaTalk. Specifically, a section where Bill reflects on his newsletter’s (Sinocism) role on “agenda-setting.” Here’s the prompt from Jordan, “As Sinocism has grown, you really have become this agenda-setter within DC for sure, as well as other capitals around the world. I'm curious how you deal with that sense of responsibility, if you feel it or not, and what you think yourself as well as other journalists covering China should be thinking about as we get into this really scary time.”
Now, let’s look at Bill’s somewhat waffling response (bolded emphasis mine): “No, it's bigger than I ever expected it to be. And it certainly has a readership that, I don't think it's accurate to say agenda-setting. But I think it's a data point or an information contribution to how people look at China. But it's still small, but I do have a lot of readers, but I don't want to take credit or say I'm setting a lot of agendas. But I think that I do feel more responsibility now, and that's why last week I think it was, I maybe sounded alarmist, but just looking at, for example, obviously I care a lot about the US-China relationship. It's extremely distressing right now to do the newsletter every day. Not only because everyone's stressed because we're all basically locked down and what's going on around us, but then also layering on top of that looking at US-China relations, and Zhao Lijian and all this stuff.”
Later in this post, I’ll praise Bill for a lot of things, but I want to start by making it clear that you cannot have it both ways. You cannot market your newsletter as “the presidential daily brief for China hands” to get more paying subscribers (many of who are paying because of your agenda-setting role) AND then claim that you are not setting a lot of agendas! Bill might find the following refresher on the function of a president’s daily brief helpful: The PDB contextualizes highly classified and influential intelligence that sets the agenda for the president’s daily discussions with her advisers. You cannot shirk responsibility on this issue; we’ve all watched Spider-Man.
My gripe with Sinocism has always been a two-pronged critique based on substantive disagreements over China analysis but also a meta-disagreement over the reflexity of Bill’s approach to Sinocism — with the latter being much more important former. In terms of the substance, I’ve written previously about how Bill’s adherence to the US China Cold War meme is reflective of a hardening in his views about the US approach to China (the thing about cynicism is it spirals in really dangerous feedback loops).
Bill also projects his personal biases onto views that should be tested with empirical evidence. He and Politico’s foreign affairs reporter Nahal Toosi have both tried to push the flimsy theory that “younger China hands tend to be more hawkish” without any comparative statistics. This goes against the empirical evidence we have on this question, which finds that millennials are actually much more supportive of undertaking friendly cooperation and engagement with China and less supportive of actively working to limit the growth of China's power compared to other age groups.
On this first point, reasonable minds can disagree. I’m much more interested in the second prong related to the reflexity of Bill and Sinocism. I’ve made the case in a past issue that there needs to be more external editing of Bill/Sinocism and newsletters in general (including the one you’re reading). Bill has a role to play in terms of being open and more reflective of his own personal biases, but you can’t do that without first reckoning with your own work’s agenda-setting function. It’s also hard to push back against paid newsletters because the vast majority of posts are not public and only go to paid subscribers, which limits the amount of external editing that can be done. One can easily envision a scenario where the seeds of that Politico story were planted in a subscriber’s-only post where Bill shared an anecdote about the hawkishness of younger China hands he interacts with. There’s no room for deliberation in that scenario. That’s partly why all of ChinAI’s posts are public and when you subscribe to ChinAI you are not getting extra access but you are supporting the mission through a tip-based/Guardian-style model.
Why am I pushing on this point? I think one of my biggest worries is a neoconservative-stye co-option of U.S.-China policy. Basically, the Wolfowitz Doctrine but applied to U.S.-China relations instead of the Iraq War. A key component of that failure mode would be the rise of a small group of people who become the architects of U.S.-China policy and who all read the same narratives about US-China relations — they become insulated from the wider body of discourse and debate about U.S.-China relations. One way to check against this is to take a page from the U.S. DoD (of all places) and avoid single-source procurement. The same could apply for Sinocism’s function in the “China-watching” community.
To be clear, Sinocism and Bill provide a lot of valuable perspectives. On elite politics, Bill is much more attuned to deciphering Party documents than the average observer, and the comprehensiveness of his knowledge about a variety of subjects is remarkable. Reading his interview made me appreciate how much harder his job is. I get stressed out after scrolling through my Twitter feed after 2 minutes so I can only imagine what it’s like to live in the weeds of #ChinaTwitterland day after day. On subjects other than the agenda-setting responsibility of Sinocism, Bill demonstrates reflectiveness. He says, “one of the things I struggle with is how to avoid DC bubble. And it's easy to fall into a bubble here. A lot of it is just trying to spend as much time with Chinese sources as possible.” We are in full agreement on this point.
I’m not saying that you shouldn’t subscribe to Sinocism. I’m just arguing that we should all be more reflective of Sinocism’s agenda-setting role in the “China-watching” space. I “grew up” reading Bill and Sinocism. ChinAI doesn’t exist without Bill’s work. There’s a great intellectual debt to be repaid here; I just happen to think that critically engaging with someone’s work is one of the best ways to repay that debt.
ChinAI Links (Four to Forward)
By Elizabeth Thurbon and Linda Weiss from University of Sydney, this International Review of Political Economy article emphasizes how states can employ geo-economic statecraft at the technological frontier. Lessons from South Korea’s push in robotics. If I’m developing a syllabus for national decision-makers about how to think about high-level technology strategy, this is pretty high up there.
FT reporting by Yuan Yang and Nian Liu: “To the outside world, China can often seem like a monolith, with edicts from Beijing ruthlessly implemented by the rest of the system. US officials regularly accuse the Chinese government of having access to all data held by companies in the country…The coronavirus pandemic has also demonstrated a much messier reality. Although China has tools that many other governments would not be able to usually deploy to track potentially infected people, such as location data from individual phones and facial recognition technology, the state’s ability to access personal data is at times limited. Co-ordination between different areas of the public sector is often sporadic and sometimes marred by bureaucratic rivalries — as the experience of the two Guangdong towns shows. Wary of alienating middle-class customers, whose lives now revolve around a series of apps on their smartphones, many private sector companies are reluctant to be seen handing over data.”
Wow, apparently if you wander just a little bit outside of the DC bubble and leave the groupspeak land of DECOUPLING behind, apparently you’ll find a lot of U.S.-China collaboration over addressing Coronavirus? Who knew?! H/t to Samm Sacks for sharing. I’m genuinely curious if this ever made it into the pages of Sinocism?
Should-read: ChinAI Syllabus
Re-upping this GovAI Syllabus launched last month. With Sophie-Charlotte Fischer, Brian Tse, and Chris Byrd, we compiled a preliminary syllabus of readings on China’s AI landscape, which covers a range of topics. Inspired by Remco Zwetsloot’s really useful syllabus on AI and International Security. Grateful to Emmie Hine for her help and proposing the tutorial that sparked the syllabus in the first place as well as others, esp. Jade Leung, for suggestions. Hope is for this to be a living document so please send recommendations for stuff to be added.
Thank you for reading and engaging.
These are Jeff Ding's (sometimes) weekly translations of Chinese-language musings on AI and related topics. Jeff is a PhD candidate in International Relations at the University of Oxford and a researcher at the Center for the Governance of AI at Oxford’s Future of Humanity Institute.
Check out the archive of all past issues here & please subscribe here to support ChinAI under a Guardian/Wikipedia-style tipping model (everyone gets the same content but those who can pay for a subscription will support access for all).
Any suggestions or feedback? Let me know at firstname.lastname@example.org or on Twitter at @jjding99